BMW to take majority stake in China JV

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BMW to take majority stake in China JV

BMW, among major companies most exposed to a trade war, is poised to take majority control of its venture in China, becoming the first beneficiary of the reforms the government has unleashed in the world's largest car market.The Munich-based luxury-car maker plans to unveil the new ownership structure of its venture with Brilliance China Automotive Holdings (1114) soon, according to a person famil...

BMW, among major companies most exposed to a trade war, is poised to take majority control of its venture in China, becoming the first beneficiary of the reforms the government has unleashed in the world's largest car market.

The Munich-based luxury-car maker plans to unveil the new ownership structure of its venture with Brilliance China Automotive Holdings (1114) soon, according to a person familiar with the plan. BMW currently holds a 50 percent stake in the partnership.

The move would make BMW the first foreign carmaker to own a majority stake in a Chinese joint venture and shows Beijing is following through on a pledge for greater market access. China and Germany agreed this week to facilitate the move.

Shares of Brilliance China Automotive and BAIC Motor, a partner of Daimler, both declined on concerns they will miss out on the ventures' future profit growth.

Brilliance China Automotive closed 12.55 percent lower to HK$11.98. Its shares dropped in the past two days, and once slumped 19.7 percent yesterday, its biggest intraday drop since October 2008.

BMW chief executive officer Harald Krueger was in Berlin at the start of the week during a summit between Chinese Prime Minister Li Keqiang and German Chancellor Angela Merkel. Among discussions were opportunities to open up China more to foreign investment. As part of corporate deals signed at the meeting, chemicals company BASF SE agreed to invest as much as US$10 billion in a new factory in China that it would wholly own, also a first for that industry.

The German company is set to boost its stake in the venture to at least 75 percent, Manager Magazin reported earlier. Daimler said it's very happy with its partnerships in China and is following the regulatory developments closely.

A move by BMW would follow plans outlined by China in April to ease foreign-ownership restrictions in the country. China said in April it is scrapping the current 50 percent ownership cap for electric-car ventures as soon as this year.